EXPLAINER — India's insurance overhaul: What changes and why it matters

By Ashwin Manikandan MUMBAI, Sept 24 (Reuters) — India's insurance regulator has proposed capping what insurers pay banks, brokers and agents to sell policies, a move that could eventually make insurance cheaper for customers but squeeze distributors' incomes. The proposed norms introduced in a discussion paper, issued late on Wednesday, are part of the Insurance Regulatory and Development Authority of India's broader effort to reform the sector after New Delhi opened it to 100% foreign ownership this year. Shares of insurance distributors and lenders with significant insurance income fell on Thursday. The proposals are not final and could change based on the feedback the regulator receives before October 25. Why Is The Irdai Doing This? Distributor compensation has risen faster than underlying business. Life insurers paid 608 billion rupees ($6.34 billion) in commissions in fiscal 2025, up 18%, while premium growth was just 6.73%, IRDAI data shows. India is the world's 10th-largest insurance market, yet insurance penetration remains low compared to the global average. The proposed changes are part of planned reforms as the IRDAI ​seeks to bring coverage closer to global levels. Wh